According to Albany Molecular Research's (AMRI), there are approximately 150 contract manufacturing organisations (CMOs) operating within the sterile injectables space with about half holding western GMP compliance status.
“Of those 75 companies, about 75% of the capacity resides with just 17 companies,” CEO William Marth told investors during a Q2 2014 conference call yesterday.
“Most recently in the US, M&A activity and compliance issues have further decreased the companies in this tier one category to less than 10,” and Oso Biopharmaceuticals Manufacturing – bought by AMRI in June for $110m (€82m) – is one of these, he said.
Oso Bio makes biologics, cytotoxic compounds and DEA controlled substances from its site in Albuquerque, New Mexico, and the deal complements AMRI’s current offerings from its Burlington, Massachusetts facility, given the all clear by the US Food and Drug Administration (FDA) in November following a 2010 warning letter.
“Within this new parenteral drug business unit, Burlington and Albuquerque will immediately become a feeder project to the other,” Marth said. “This is further complemented by the fact that both sides have recently successfully navigated their annual GMP inspections from the FDA.”
In-house or Outsource?
Marth told stakeholders US contract manufacturing is set to surpass annual revenues of $15bn, but was questioned about whether recent pharma M&As in the injectables space may suggest a return to in-house production.
“When you really think about the number of facilities owned by big pharma or even generic pharmas in the US that are operating at a full compliance level here in the US, it’s really relatively small,” Marth said.
Hikma acquired the now defunct Ben Venue Labs last week, and Sun Pharma recently bought CMO Pharmalucence. Meanwhile, whilst Pfizer’s $225m purchase of InnoPharma last month did not include manufacturing capacity, the firm told this publication Pfizer has “key capabilities” in injectables manufacturing.
Both Eli Lilly and Janssen have told Outsourcing-Pharma.com its manufacturing strategy was to keep more complex manufacturing processes in-house, rather than rely on third-parties.
Marth, however, suggested such manufacturing is not returning in-house. “Realistically speaking, the market that we’re focused on is more complex,” he said. “I don’t see necessarily Amgen, Genentech or the others acquiring CMOs at this point in time.
“I know with the bidding in Oso Bio as a matter of fact, which was a great asset, there were to my knowledge no big pharma involved whatsoever. There was one generic company that I know of but that was it.”
For the second quarter 2014, the firm reported a 21% growth in contract revenue on last year to $61.5m, due in part to the acquisition of API maker Cedarburg in March.
Following the acquisitions of Oso and Cedarburg, the company has upped its full-year contract revenues 33% to between $275m and $283m, whilst large scale manufacturing revenue is expected to be up 50% at the midpoint to between $196m and $202m.